Given Canada’s enormous property bubble that is guaranteed to pop, it should be no surprise to discover Canadians losing sleep over their finances.
According to the March RBC Canadian Consumer Outlook Index, most Canadians (65 per cent) are losing sleep over their finances. More than one-in-four Canadians (27 per cent) are up at night worrying about paying off their debt, followed by nearly one-in-five (18 per cent) who worry about having enough for retirement and 16 per cent who worry about having no emergency fund. The survey also found that one-in-three (34 per cent) were not confident about any aspect of their financial situation.
More Canadians believe the national economy will worsen over the next 12 months (20 per cent in March compared to 13 per cent in February).
Alberta vs. Quebec
In response to California USA vs. Ontario Canada – Which State (Province) Is In Worse Shape? Canadian Banks vs. US Banks Comparison several people sent me articles on Quebec.
Please consider Quebec: A poor little rich province
After Alberta’s finance minister, Ted Morton, delivered a deficit budget last month, he vowed to visit university campuses and tell students, “You and your parents are spending a bunch of money to help Quebec, and they’re paying half the tuition you are.”
Not only do Quebecers pay less tuition, they also pay far less for electricity, drugs and daycare. Quebec offers a more generous parental leave program than elsewhere, and higher corporate subsidies.
“I don’t think there is any place in the world panicking as much on the question of debt as Quebec,” said economist Louis Gill. The reason for this, as Quebec prepares to unveil another deficit budget March 30, is simple: it is Canada’s most indebted province.
Its debt is at 94 per cent of its gross domestic product, just ahead of Japan, Italy and Greece, whose debts exceed their GDP, according to numbers calculated by the provincial finance ministry.
After Ontario and Quebec skewered the lucrative oilsands at the Copenhagen climate-change summit in December, Premier Ed Stelmach pointed out Alberta paid $21 billion more than it got back from Ottawa during the worst economic downturn since the 1930s. “That cannot continue,” he warned.
He was talking about equalization, the program that ensures public services are at a comparable level across the country. Quebec, a net recipient of federal funds, is its largest beneficiary at $8.5 billion.
“There is a sense of emergency,” said task force member Pierre Fortin, a University of Quebec at Montreal economist. “People have become more fearful of public indebtedness than before.”
Quebec’s gross debt stood at $151 billion last fiscal year, or 49.9 per cent of its GDP. It will rise to 53.5 per cent this year. That compares to 30.1 per cent for Ontario and 4.2 per cent for Alberta.
According to the OECD measure, which includes Quebec’s share of the federal debt, it’s at $286 billion, even as the province offers services that others do not.
For instance, Quebec has instituted a $7-a-day daycare system. Another Quebec benefit: everyone pays less for electricity because of a government decree placed upon Crown-owned Hydro-Québec.
Even with higher income taxes, families in Quebec have it so good that University of Sherbrooke economist Luc Godbout co-authored a book in 2008 called Quebec: A Paradise for Families?
Quebec’s families hold on to much more of their income than those in other provinces because of government transfers and cheap daycare, Godbout found.
“Quebecers choose to have a level of services way above their means,” said task force member Claude Montmarquette, president of economic research group CIRANO.
Quebecers have a level of services way above their means. The rest of Canada pays the price.
In regards to worrying about debt, it’s a bit late now. As happened with buyers of Florida condos in 2005-2006, most Canadians recently buying property, especially condos, will soon find out how hard it is to escape an illiquid investment in a market with no buyers.
Mike “Mish” Shedlock
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